23.08.2022

How can a strategic balance sheet help your company make further decisions?

A company's strategic balance sheet, which is one method of analyzing a company's success factors, shows a company's weaknesses as well as strengths. This method takes into account such factors as, finance, marketing or production, among others. Of course, there can be up to several hundred factors in this analysis. The main essence of the strategic balance sheet is a systematic and repeated analysis of the company.

What is a strategic balance sheet?

The study of an enterprise's strategic position involves, among other things, determining its internal potential or opportunities for development in the long term. A thorough analysis of an enterprise's situation requires, cumbersome and time-consuming research. Combining financial, organizational and marketing analysis is difficult, so this method is very demanding to carry out. This analysis is carried out by specialists who are part of the company under study or consultants from other organizations. They record the results in point form in a special sheet. These points then show the strategic potential of the enterprise.

The downside of this method, however, is that it is both time and financially demanding. In addition, hiring people who specialize in this method of examination is also very often necessary. These balance sheets are most often prepared during moments of crisis. This method is very often used by consulting companies, but other methods are also not excluded.

Strategic balance sheet and enterprise decisions

Since the strategic balance sheet of a company is mainly aimed at analyzing all the resources of a given company and its potential, there is no doubt that better decisions can be made on this basis. The ability to objectively assess the performance of the company and the skills of the employees it employs, by independent consultants, allows us to better understand what our company, should improve in. In the case of analyzing the competence of employees, first of all it takes into account, qualifications, experience or performance of the examined employee.

Employees in companies should not only be evaluated in terms of their industry-related skills. Nowadays, problem-solving abilities or decision-making skills are increasingly valued among employees. A company's strategic balance sheet, by focusing on such aspects, strongly promotes employees who are not afraid to make choices.

Of course, companies have diversified success factors, but each of them must make the best possible decisions to be competitive and profitable in the long run. A well-conducted strategic balance sheet allows, analyze these factors and helps in planning and decision-making, taking into account the most important factors for the company.

Steps to follow when analyzing the strategic balance sheet

The methodology and steps involved in analyzing a strategic balance sheet are not always the same. For example, M. Lisinski proposes a breakdown that consists of 3 stages. The first stage is the selection of a specific set of strategic resources. The second stage focuses on evaluating the activities of the company's functions. The third stage, on the other hand, undertakes the identification of the organization's strengths and weaknesses.

The first step in proceeding with a strategic balance sheet analysis is very important in the context of conducting the study. The appropriate selection of resources or strategic areas indicates to us a certain resource of the company's strengths and assets. So, when studying the strategic potential of the company, it is necessary to identify not only the basic groups of resources, but also the functions of the organization's activities.

The second step in proceeding with a strategic balance sheet analysis should focus on a thorough evaluation of the previously mentioned business functions of the company on the ground of the previously selected resources. The assessment should be based on degrees of intensity. The most common is a four- or five-point scale. The next step in this stage is to sum up and calculate the arithmetic average based on the previously awarded points.

The third stage is to determine both the weaknesses and strengths of the organization, using a comparative table that has both positive and negative assessments. Then, thanks to this table, we are able to determine the overall assessment-balance of the enterprise, which will allow us to determine its strategic changes and outline which way our decisions should go, regarding the future activities of the enterprise.

Summary

The strategic balance sheet of a company is a tool that allows us not only to comprehensively analyze our company, but also helps us make business decisions that focus our attention on improving the company's operations. By optimizing our company in this way, we are able to increase our profits or recover from the crisis that plagues our company. However, it is important to remember that there is only a method of evaluation from which we need to draw appropriate conclusions. The strategic balance sheet is such a complex tool that its implementation is very demanding, so you need to take into account the rather high cost of conducting such an analysis. In order for this analysis to be qualitative, you need to reckon with the employment of high-class specialists, dealing with this issue. Remember, the company's strategy is the basis, and the decisions we make can either disturb this basis or strengthen it.

Natalia Marchelewicz

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